Wealthy Baby Boomers Will Make Heirs Wait, Schwab Survey Says
That’s according to a new survey from Charles Schwab, which found just 21% of boomers with at least $1 million in investable assets said they “want the next generation to enjoy my money while I’m alive.” That compares with 53% of millennials and 44% of Gen X Americans with assets in the same range.
The survey excluded the value of homes and retirement accounts when calculating investable assets.
A huge transfer of wealth is expected to take place over the next quarter-century in the U.S., with $2.5 trillion headed to heirs in 2025 alone, according to research firm Cerulli Associates. The universe of recipients is relatively small, however: A Bloomberg analysis found that just 20% of American households saw a substantial gift, trust or inheritance from a deceased family member in recent decades.
What seems like stinginess, though, could be thoughtfulness in disguise.
“Boomers are likely to hold on to their assets during their lifetime due to the uncertainties of aging,” said Susan Hirshman, director of wealth management for Schwab Wealth Advisory and Schwab Center for Financial Research. “As older boomers are nearing 80, the idea and fear of becoming a burden on their loved ones start to become more real, and so they hold on to assets for their peace of mind.”
Wealthy members of the millennial and Gen X generations “place a greater value on experiences than material items to fuel their happiness,” Hirshman said. “We see that play out in their desire to distribute wealth to their families during their lifetimes, to share in the joy and make memories.”
Overall, Americans with more than $1 million in investable assets said they plan to distribute about 40% of their wealth during their lifetime and anticipate doling out about $4.1 million on average. A good chunk of that value—40%—is expected to come in the form of real estate. Investments would make up another 31%, cash 18% and life insurance proceeds 11%.
What they lack in perceived selfishness, millennial and Gen X make up for in stipulations. More than 90% of each cohort is planning gifts with strings attached, compared with only one in three boomers.
“A trust may have stipulations around reaching a certain age, maintaining grades in school, graduating college or graduate school, getting a job or around life milestones such as marrying, having children or buying a house,” said Hirshman.
The online survey by Logica Research for Schwab reached 1,005 Americans with $1 million or more in investable assets, excluding homes and retirement assets, and was done between August 8 and Sept. 2.
For more information see Suzanne Woolley “Wealthy Baby Boomers Will Make Heirs Wait, Schwab Survey Says” December 6, 2024.